Microsoft Said to Plan Debut of New Xbox in 2013 at Earliest

By Dina Bass and Ian King -
Mar 15, 2012

Microsoft Corp. (MSFT) will release the
next version of its Xbox console in 2013 at the earliest, as the
company squeezes at least one more year of sales out of its
current model, said two people with knowledge of the matter.

The company may show the successor to its Xbox 360 in June
2013 at the E3 conference and put it on sale that same year,
said the people, who declined to be named because the plans are
confidential. David Dennis, a company spokesman, said earlier
today that Microsoft won’t discuss new Xbox hardware at this
year’s E3, quelling speculation that the device would be
unveiled at the 2012 show.

Microsoft’s Xbox 360, bolstered by the Kinect motion-sensor
accessory, had its best year of sales in 2011 -- the console’s
seventh on the market. Announcing the next model too soon risks
hurting orders for the current lineup, and new consoles
typically lose money for their first few years. The Xbox 360 is
profitable, giving the company incentive to keep it on store
shelves for a longer period.

“They’re still selling a lot of Xbox 360, and they’re
making money,” said Michael Pachter, an analyst at Wedbush
Securities Inc. in Los Angeles. “I don’t think the world needs
them to put a new console out just because we’re bored.”

Sales Growth

Microsoft’s entertainment division, which includes the
Xbox, posted a 45 percent sales gain to $8.91 billion in the
fiscal year that ended in June. The Xbox 360 outsold Nintendo
Co. (7974)’s Wii and Sony Corp. (6758)’s PlayStation 3 in 2011, and also sold
better than any other TV-connected devices, including DVD
players and home-theater systems, Dennis said.

“There will be no talk of new Xbox hardware at E3 or
anytime soon,” Dennis wrote today in an e-mailed statement. He
declined to say when Microsoft would release the next model.
“For us, 2012 is all about Xbox 360.”

Microsoft has no reason to put out a new console soon,
Pachter said. He estimates that the company makes about $115 of
profit on the $300 Xbox 360, a model with a hard drive.

Pachter expects Microsoft to release the next version at
the end of 2013 or beginning of 2014. The company will probably
look at competitive pressure and sales in the current year to
determine timing, he said.

Nintendo, meanwhile, is due to release a new machine called
the Wii U later this year. Sony will probably update the
PlayStation around the same time Microsoft puts out a new Xbox,
Pachter said.